The anticipation and anxiety in the market ahead of the corporate earnings announcement by the big tech firms and the major consumer discretionary companies weighed on major US stock index futures, with the S&P500 Index Futures (CME: ES) 0.44% lower during the trading session.
Investors anticipate a lower growth outlook and would be keen on how the companies’ revenues, earnings and margins have weathered the uncertain macroeconomic conditions, including the sticky inflation and monetary policy tightening prevalent in the major economies. PepsiCo and GM released better-than-expected earnings reports before the bell, with Amazon and Microsoft releasing after the bell.
The 4H chart shows that the 23.60% Fibonacci retracement level has halted the bears’ fightback at the top, and the reaction of the price action around the level could determine the direction of the index futures during the trading session. A move through the 23.60% Fibonacci retracement level would give the bears a run at the 4131.25 support level and the lower trendline of the ascending channel. A breakout below the lower trendline of the ascending channel would send a bearish signal and could push the price action towards the support level at 4104.75.
However, failure to sustainably break below the 23.60% Fibonacci retracement level could result in a bulls’ pullback, with the 50-day moving average (50-EMA) acting as the immediate resistance. A breakout above the 50-EMA would bring the 4168.50 and 4189.75 resistance levels into play.
The analyst could be expecting a weak outlook from the big tech releasing their earnings reports in the upcoming days. If the bearish sentiment continues to drive the index futures, a short-term trading opportunity could exist as the index futures sustainably move through the 4131.25 support level. However, failure to sustain a move below the 4131.25 support level would leave the 4168.50 resistance level in play.
Sources: TradingView,Reuters, Barchart, CNBC.
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